Question 1134215: Suppose your salary in 2016 is $30,000. Assuming an annual inflation rate of 8%, what salary do you need to earn in 2019 in order to have the same purchasing power? (Round your answer to two decimal places.)
Answer by Theo(13342)   (Show Source):
You can put this solution on YOUR website! 2019 - 2016 = 3 years.
30,000 * 1.08^3 = 37,791.36.
because of inflation, if something cost 30,000 today, it will cost 37,791.36 three years from now.
in order to pay for that same things three years from now, you need to be making 37,791.36 dollars.
your salary needs to grow by 8% a year just to keep up with inflation.
if you make less, you lose buying power.
if you make more, you gain buying power.
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